Justia Insurance Law Opinion Summaries

Arizona equitable indemnity law does not incorporate the Restatement (First) of Restitution section 78 because it conflicts with Arizona’s general equitable indemnity principles.Michael Bovre rented a vehicle from Payless Car Rental System Inc. Payless offered Bovre supplemental liability insurance (SLI) under a policy provided by KnightBrook Insurance Co. Bovre caused an accident while driving the rental vehicle that injured Lorraine and Robert McGill. The McGills sued Bovre. The parties settled. Bovre assigned to the McGills his claims against KnightBrook and Payless for their alleged failure to provide supplemental liability insurance (SLI) and agreed to an adverse judgment. Thereafter, the McGills sued Payless and KnightBrook seeking to recover the judgment. The McGills and KnightBrook entered into a settlement in which the McGills’ claims against Payless were assigned to KnightBrook, which paid the McGills the $970,000 SLI policy limit. KnightBrook then filed an action in federal court against Payless, asserting an equitable indemnification claim for the $970,000 it paid McGills. Relying on the First Restatement section 78, the district court ruled that KnightBrook was entitled to equitable indemnification from Payless for the $970,000 SLI policy limits. On appeal, the Ninth Circuit certified two questions to the Supreme Court. The court answered the first question as set forth above, which rendered moot the second question. View "KnightBrook Insurance Co. v. Payless Car Rental System Inc." on Justia Law

In this action challenging an insurance company’s doubling of Plaintiff’s insurance premium, the Seventh Circuit reversed the district court’s dismissal of Plaintiff’s complaint for failure to state a claim, holding that Plaintiff was entitled to relief on her contract claim and that the allegations Plaintiff raised were enough to permit her to go forward on her other theories.When Plaintiff was sixty-seven years old, she discovered that Metropolitan Life Insurance Company (MetLife) more than doubled her insurance premium. Plaintiff brought this lawsuit against MetLife on behalf of herself and a proposed class, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The district court granted MetLife’s motion to dismiss for failure to state a claim, concluding that the insurance policy unambiguously permitted MetLife to raise Plaintiff’s premium. The First Circuit disagreed, holding that the allegations raised in the complaint were enough to entitle Plaintiff to prevail on the liability phase of her contract claim and to go forward on her remaining claims. View "Newman v. Metropolitan Life Insurance Co." on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

The United States Court of Appeals for the Ninth Circuit certified a certified question of Oregon law to the Oregon Supreme Court. The question related to claims under ORS 124.110 for financial abuse of “vulnerable persons” (here, elderly persons) who purchased long-term care insurance from defendant Bankers Life & Casualty Co. (Bankers) and sought to receive insurance benefits under their policies. Specifically, the Ninth Circuit asked whether a plaintiff states a claim under ORS 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract. Plaintiffs were elderly Oregonians or their successors who purchased long-term healthcare insurance policies sold by Bankers and its parent company. Plaintiffs alleged Bankers developed onerous procedures to delay and deny insurance claims: failing to answer phone calls, losing documents, denying claims without notifying policyholders, denying claims for reasons that did not comport with Oregon law, and paying policyholders less than what they were owed under their policies. Bankers allegedly collected premium payments and, without good cause, delayed and denied insurance benefits to which Plaintiffs were entitled. The Oregon Supreme Court answered in the negative: allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of “money or property.” View "Bates v. Bankers Life and Casualty Co." on Justia Law

Heimer, one year over the legal drinking age, drank alcohol with friends and then rode motorbikes in a field. Heimer and his friend collided. Heimer suffered extensive injuries, incurring more than $197,333.50 in medical bills. Heimer’s blood alcohol level shortly after the crash was 0.152, nearly twice the limit to legally use an off-road vehicle in Michigan. Heimer was insured. As required by his plan, he submitted a medical claim form shortly after the accident. The plan administrator denied coverage based on an exclusion for “[s]ervices, supplies, care or treatment of any injury or [s]ickness which occurred as a result of a Covered Person’s illegal use of alcohol.” After exhausting administrative appeals, Heimer filed suit. The district court held that the plan exclusion did not encompass Heimer’s injuries, reasoning that there is a difference between the illegal use of alcohol—such as drinking while under 21 or drinking in defiance of a court order—and illegal post-consumption conduct, such as the illegal use of a motor vehicle. The Sixth Circuit affirmed. Reading “illegal use of alcohol” to disclaim coverage only for the illegal consumption of alcohol, and not for illegal post-consumption conduct is consistent with the ordinary meaning of “use” and best gives effect to the contract as a whole. View "Heimer v. Companion Life Insurance Co." on Justia Law

Plaintiff appealed the district court's grant of summary judgment for Provident on breach-of-contract and tortious-breach-of-contract claims stemming from two disability insurance policies that Provident issued to plaintiff. The Fifth Circuit held that plaintiff presented sufficient evidence to raise a genuine dispute of material fact as to whether his disability resulted from injury and arthritis, in which case he would be entitled to lifelong benefits. Therefore, the court reversed the grant of summary judgment as to the breach-of-contract claim. Even if plaintiff had not waived his claim for punitive damages based on the theory that Provident tortiously breached the contract, he failed to offer evidence showing that Provident lacked an arguable reason for administering his claim under the sickness provisions. Accordingly, the court affirmed as to this issue. View "Cox v. Provident Life & Accident Insurance Co." on Justia Law

Palmer’s vacant Detroit apartment complex was covered by a Scottsdale fire insurance policy until November 2012. The property was vandalized in February 2012. Palmer reported the loss in October 2013. Scottsdale replied that it was investigating. In November, Palmer sent Scottsdale an itemized Proof of Loss. Scottsdale paid Palmer $150,000 in June 2014. Michigan law provides that losses under any fire insurance policy shall be paid within 30 days after receipt of proof of loss. Palmer requested an appraisal. Scottsdale agreed, noting the claim remained under investigation. Appraisers concluded that Palmer’s actual-cash-value loss was $1,642,796.76. The policy limit was $1,000,000. Scottsdale tendered checks over a period of several months that paid the balance. Palmer requested penalty interest for late payment. Michigan law states that if benefits are not paid on a timely basis, they bear simple interest from a date 60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per annum. The Sixth Circuit reversed the district court’s conclusion that the penalty-interest claim arose “under the policy” and was barred by the policy’s two-year limitations provision. Palmer did not allege that Scottsdale breached the policy agreement. Scottsdale paid the insured loss and the policy had no time limit for paying a loss, Palmer has no unvindicated rights and no claim “under the policy” to assert. His claim is under the statute. View "Palmer Park Square, LLC v. Scottsdale Ins. Co." on Justia Law

After the Garcias bought their Lake Station Property in 2004, it was used as an automobile repair shop and a day spa. It previously was used as a dry cleaning facility and contained six underground storage tanks: four were used for petroleum-based Stoddard solvent, one was used for gasoline, and the last for heating oil. In 1999, the dry cleaning company reported a leak from the Stoddard tanks to the Indiana Department of Environmental Management (IDEM). In 2000, a site investigation was conducted and five groundwater monitoring wells were installed. IDEM requested additional information and testing in 2001 and 2004. The Garcias claim they had no knowledge of the preexisting environmental contamination before insuring with Atlantic. A 2014 letter from Environmental Inc. brought the contamination to the Garcias’ attention. The Garcias hired Environmental to investigate and learned that Perchloroethylene solvent and heating oil still affected the property. Atlantic obtained a declaration that its Commercial General Liability Coverage (CGL) policies did not apply. The Seventh Circuit affirmed, reading a “Claims in Process” exclusion to preclude coverage for losses or claims for damages arising out of property damage—known or unknown—that occurred or was in the process of occurring before the policy’s inception. View "Atlantic Casualty Insurance Co v. Garcia" on Justia Law

The application of Georgia law concerning a pollution exclusion contained in an insurance policy as excluding coverage for bodily injuries resulting from the ingestion of lead-based paint under the principle of lex loci contractus does not violate Maryland public policy.Appellants were exposed to lead-based paint at a property owned by the Salvation Army. Appellants sued Defendants, alleging lead-based paint related tort claims. Liberty Mutual Insurance Company issued comprehensive general liability insurance policies to the Salvation Army. The policies, which were purchased in Georgia, did not include lead-based paint exclusion provisions but did include pollution exclusion provisions. Appellants sought affirmation that Liberty Mutual was obligated to indemnify the Salvation Army and defend against Appellants’ claims. Liberty Mutual moved to dismiss the complaint, arguing that Maryland courts follow the doctrine of lex loci contracts in choosing the applicable law and that, under Georgia law, the insurance policy did not cover claims for lead-based paint poisoning. The Supreme Court held that application of Georgia law concerning the policy’s pollution exclusion under the principle of lex loci contracts does not violate Maryland public policy. View "Brownlee v. Liberty Mutual Fire Insurance Co." on Justia Law